October 18, 2011
Last week’s sale of 900,000 metric tons (mt) of U.S. corn to China highlighted the fact lower corn prices have rejuvenated export demand over the past month. USDA last Wednesday cut its projection for 2011-2012 U.S. corn exports by another 50 million bushels to 1.600 billion, which would be a drop of 12.8% from last year’s 1.835 billion bushels.
However, with USDA reporting net U.S. corn export sales of 49.6 million bushels for the week ended Oct. 6, U.S. corn export sales were running just 3.2% below a year earlier after the first five weeks of the new marketing year.
U.S. corn export sales commitments through Oct. 6 had already reached 45% of USDA’s marketing year export projection, compared with only 42% last year and a five-year average of only 36%.
Another strong weekly sales total is a given because of the Chinese business, which USDA reported in its daily exports sales report. This demand is likely to spur talk that USDA is now underestimating U.S. exports and overestimating the 2011-2012 U.S. corn carryout.
USDA appears to be underestimating China’s demand for corn imports. USDA projects China will import 2 million metric tons (mmt) of corn in 2011-2012, but China has already committed to buy at least 1.923 mmt of U.S. corn.
However, U.S. corn will face tough competition in the world market from Black Sea region and South American corn supplies, as well as from feed wheat. USDA sees the U.S. share of the world corn export market slipping to 43.2% in 2011-2012 from 52.1% last year.
USDA on Wednesday raised its estimate of Ukraine’s 2012 corn crop by 3 mmt to 21 mmt and raised that country’s projected exports by 2 mmt to 12 mmt. Last year, Ukraine exported only 5 mmt of corn following crop problems.
Ukraine’s 2011-2012 grain exports have so far been limited by government-imposed export duties. The duties were cancelled for corn and wheat last week by parliament, which should boost exports, however, the legislation must still be signed into law by Ukraine’s president.
Argentina is expected to produce 27.5 mmt of corn for 2011-2012, up from 22.5 mmt last year and export 19.5 mmt up from 15 mmt last year. Argentina is expected to sign a phytosanitary agreement with China in November or December, clearing the way for China to import Argentine corn.
Brazil’s corn production is expected to rise to 61.5 mmt this year from 57.5 mmt last year, but exports are seen steady at 8.5 mmt.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
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